What does 2026 hold for investors? No one can predict the future, but investors can certainly prepare for it. Thursday’s VettaFi webcast, “Finding balance and resilience in a shifting market,” put an emphasis on the merits of diversification, ETFs, and intriguing all weather investments for 2026.
See more: How Active Bond ETFs Can Stand Out in Global Financial Uncertainty
Hosted by VettaFi Head of Research Todd Rosenbluth, the segment invited State Street Investment Management Managing Director Head of SPDR Americas Research Matt Bartolini to share a view on diversification and ETFs in 2026. Bartolini shared data from State Street to help shape his case that investors may want to consider a more durable, diversified portfolio right now.
“The idea of resilience and balance is not the idea of being defensive,” Bartolini said. “It's about being diversified, trying to understand and build portfolios that can zig when other things zag, because the future largely remains unknown.”
Some 64% of respondents to a survey question during the webcast pointed to U.S. equity and valuation concentrations as their top concern. However, Bartolini argued that really investors may want to have an “all of the above” view on risks. Inflation and geopolitics, for example, also merit thought, he noted.
Bartolini Discusses Data Behind Diversification
He grounded his take with a look back on equity flows data, inflation analyses, and how the market got to its particularly concentrated state. Many investors are heavily concentrated in equities, with some 78% of all ETF equity allocations going to U.S. equities. 2025 was the “best year for cross asset returns since 2019.”
That equity focus, Bartolini said, puts investors’ assets at risk due to a lack of diversification. While there has been some broadening compared to 2024, which saw 85% of all equity allocations into U.S. equities, the ongoing narrow focus for equities does pose some problems. That has happened even as ex-U.S. equities have performed well.
“We saw that last year 79% of non-U.S. equity markets outperformed the U.S,” Bartolini said, adding that that trend has strengthened into the start of 2026. “That's the largest hit rate since 2009.”
Inflation Stubborn? Factors to Watch
Globally, too, he said, data suggests a macroeconomic environment in which inflation remains an issue. While 2025 saw central banks ease around the world, with liquidity formation and increasing money supply benefitting risk assets, inflationary issues persist.
Australia, for example, has had to tighten policy. U.S. trade decisions have led to ex-U.S. markets issuing debt securities to “offset … weakening aggregate demand,” potentially risking inflation there, too. The firm’s charts have been revised recently, as well. They have seen upside revisions for emerging markets while U.S. equities appear a bit more on the downside.
All of this coincides with major investment in AI and big fiscal debt issuance, he said. He added that while the U.S. looks reasonably positive, risks remain. Term premiums have risen in fixed income, he noted, due to concerns about rising deficits, with inflation projections suggesting a bit more stubbornness.
“That's why I think you'd want to own different assets to be more diversified and add resilience, because this is an uncertain time for the markets, even though it feels, you know, growth is positive,” Bartolini said. “Not saying to not own stocks, but saying to not just own stocks.”
ETF Options
That’s where the second speaker, Chris Ward of Bridgewater Associates, chimed in. The firm, he explained, has crafted an all weather strategy that can add diversification to portfolios.
“There are some truly seismic shifts we're seeing in markets, geopolitics, technology,” Bridgewater said. “It's a challenging time to be an investor. It's a time that we think cries out for diversification and resiliency at a time when, frankly, most investors are historically concentrated."
The shop diversifies exposure to growth and inflation drivers with a “capital efficient” portfolio design. Ward described growth and inflation as the “fundamental drivers” of the performance differences between asset classes in market cycles.
The shop does so by deploying 25% of risk into assets that benefit from growth outperformance and underperformance each. It also deploys 25% of risk into assets benefitting from higher than expected inflation and lower than expected inflation. It uses derivatives to help meet those risk targets.
“You're still long assets. You're earning risk premium — some assets will be outperforming their average while others are underperforming — which means you're smoothing out volatility along the way.”
The firm launched the SPDR Bridgewater All Weather ETF (ALLW) in March last year, to package that approach in the ETF wrapper. The ETF actively invests, for an 85 basis point fee, in a range of assets, adding derivatives like futures, swaps, and forwards. For those looking to address that risk in 2026 and get some diversification, the fund could be worth consideration.
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